Punit Goenka Hints At Some Layoffs In Zee After Sony Terminates Merger Deal: Report

"I am not saying that there's going to be large levels of layoffs, but we will have to see which are the overlaps," Goenka said.

Zee is reassessing its strategies as an independent entity and concentrating on improving its performance in the upcoming quarters

Source : Getty

Zee Entertainment is reportedly to undergo some layoffs as the company aims to streamline employee costs in order to enhance profitability, said Zee CEO Punit Goenka. This development came after Sony terminated the merger deal with Zee, which was signed more than 2 years ago. The deal was aimed towards building a combined entity worth $ 10 billion.

"Tightening our belt on manpower will be part of the plan going forward as we talk about frugality," Goenka said during the third quarter earnings call of FY24, reported moneycontrol.

"I am not saying that there's going to be large levels of layoffs, but we will have to see which are the overlaps," he added. He also mentioned that numerous proposals and conditions were presented to Sony to address their demands, yet regrettably, they remain unaccepted.

"The company's proposed merger was terminated by Sony through a communication received on January 22, 2024. The same was reviewed by our Board, and appropriate steps have been taken into consideration with the legal experts that are in the best interest of our shareholders and stakeholders. We have even approached the National Company Law Tribunal (NCLT) to seek direction on the implementation of the scheme," Goenka said.

Zee is reassessing its strategies as an independent entity and concentrating on improving its performance in the upcoming quarters. The company announced a 140 per cent rise in profit to Rs 58.5 crore in the December quarter of FY24, compared to Rs 24.32 crore recorded during the corresponding period a year ago.

"In Q3FY24, overall operating costs declined by 12.8 per cent quarter-on-quarter (QoQ) due to lower content costs, fewer movie releases and continuous cost optimisation in Zee5. Given our business has high operating leverage, despite effective cost management, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margins has declined to 10.2 per cent. Net profit for the quarter and year was impacted by merger expenses related exceptional items which came to about Rs 60.3 crore during the quarter," said Chief Financial Officer Rohit Gupta.

Gupta added that while our recent performance has been subdued, a significant portion of this can be attributed to temporary and transitory factors.

"Our target will be to reach 8 to 10 per cent overall revenue CAGR (Compound Annual Growth Rate) with the current portfolio and to get back to 18 to 20 per cent EBITDA margin profile in a stable macro environment. While we will somewhat depend on macro recovery for overall revenue growth, to have a better degree of control on our cost structure, we are revisiting with frugality and a fiscal prudence mindset," the CFO said.